U.S. technology shares rally
Stocks reverse Monday's steep declines
By Stephanie O'Brien and David Wilkerson,
CBS MarketWatch
Last Update: 4:59 PM ET Sep 1, 1998
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NEW YORK (CBS.MW) -- U.S. technology issues raced higher in
volatile trading Tuesday, a day after the tech-heavy Nasdaq suffered its
biggest decline ever. Analysts say the third-quarter earnings picture will be
the ultimate factor in determining where things go from here.
The Philadelphia Semiconductor Index jumped 5.4 percent, and the
Morgan Stanley Technology Index of blue-chip issues bolted
7.3 percent. The broader Pacific Stock Exchange Technology Index was
up 5.9 percent. The Amex Networking Index rose 6.7 percent. The
CBOE Software Index added 7.0 percent.
In the broader market, the Dow Jones Industrial Average rose 288 to
7827, while the Nasdaq Composite Index, which contains many
technology issues, rose 76 to 1575.
The Amex Internet Index rose 7.6 percent, about half of what it lost a day
earlier. The Goldman Sachs Computer Hardware Index which rose 5.9
percent after dipping in the early part of the session.
"The equity market has become overly dependent on a small number of
stocks that developed signs of overconfidence," said Christine Callies,
chief investment strategist at CS First Boston.
"After investors have cleaned house, they are going to return to looking at
company reports and economic releases. Profits probably won't collapse.
The U.S. economy might wobble, but the low interest rate environment
will help offset shaken consumer confidence," Callies said.
Networking companies
The stocks of networking rose, helped by Cisco Systems (CSCO), which
rose 8 1/8 or 9.9 percent to 90;. Shares of 3Com (COMS) rose 1 13/16
to 25 1/2; Ascend Communications (ASND) rose 2 7/8 to 38 1/16;
shares of Xylan (XYLN) added 15/16 to 16 3/16.
Semiconductors
Shares of semiconductor makers also rallied.
Analog Devices (ADI) rose 1/4 to 14 5/16. Shares of Intel Corp.
(INTC) rose 4 13/16 to 76. Among chip manufacturing equipment
makers, Lam Research (LRCX), rose 1 1/16 to 12.
Net stocks oscillate
Internet stocks were volatile.Yahoo! (YHOO) rose 3 1/4 to 72 1/4;
Search company Inktomi (INKT) fell 2 3/8 to 51 3/8. America Online
(AOL) rose 3 15/16 to 85 7/8, while online bookseller Amazon.com
(AMZN) lost 3 51/64 to 79 61/64; DoubleClick (DCLK) rose 7/8 to 24
3/4 and Broadcast.com (BCST) fell 2 5/8 to 35 1/4.
Right timing
Concerned about volatility and earnings declines, Dan Shick, a portfolio
manager at Cincinnati-based Gradison-McDonald, sold 250,000 shares
of Compaq and 130,000 shares of Intel about two weeks ago. He was
particularly worried about the impact of Asian economic troubles on the
earnings of those two companies.
"We won't jump back in until we get a better handle (on the effects of
Asia) and see improved prospects," Shick said. He hasn't given up on the
tech sector though, and is holding on to 250,000 shares of Sun
Microsystems, because of the networking company's fundamentals.
Software shares
Among software makers, Netscape (NSCP) rose 3 1/8 to 21 1/8.
Microsoft (MSFT) rose 5 5/16 to 101 1/4. Broderbund (BROD) fell 1
1/16 to13 1/16; gamemaker Electronic Arts (ERTS) rose 6 to 44 1/8;
BMC Software (BMCS) added 4 3/8 to 46 11/16.
Computer Associates (CA), rose 3 1/8 to 30 1/8.
Computer makers
Hewlett-Packard (HWP) rose 1 9/16 to 50 1/8. IBM (IBM) advanced 5
5/16 to 117 15/16; Compaq (CPQ) rose 2 to 29 15/16; and Apple
(AAPL) was up 2 15/16 to 34 1/8. Dell (DELL) rose 8 3/8 to108 3/8.
cbs.marketwatch.com
Well we had a nice rally but we will need some follow through before we can call this recent sell off anything but a bear market.
Regards, Jeff
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